EU announces €90bn loan for Ukraine in 'warning shot to Putin' - but fails to agree on using frozen Russian assets

However, the leaders failed to agree on using frozen Russian assets to help finance the loan, as Ukraine had hoped for. 

Instead, the €90billion interest-free loan will be funded by borrowing and backed up by headroom in the bloc's budget as well as an agreement to amend its so-called "multiannual financial framework".

The deal follows days of crunch talks in Brussels.

EU leaders say it will be able to meet Ukraine's military and economic demands for the next two years.

Ukraine will only need to pay back the loan once it receives reparations after the war. "Until then, the immobilised Russian assets will remain immobilised and the union reserves its right to make use of the cash balances to finance the loan," European Commission President Ursula von der Leyen told reporters.

Kirill Dmitriev, who has been a key envoy for Moscow in recent negotiations with the US, has branded EU leaders as "warmongers" following the deal.

Read more: 'Money today or blood tomorrow': EU moves toward using frozen Russian assets to support Ukraine

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He added that "voices of reason" in the bloc, likely referring to the pro-Russia Hungary and Slovakia, had not been listened to. 

The deal fell short of unlocking frozen Russian assets for use in Ukraine despite many leaders pushing for it, including Britain’s Prime Minister Sir Keir Starmer.

His spokesperson said on Thursday: “I think it's evident within the government's actions that what we want to see is those immobilised assets used to support Ukraine. 

"We believe delivering these funds sends a very clear signal to Putin that he cannot outlast the support of the UK and our allies, that is what we remain focused on."

However, it has still been hailed as sending a clear signal to Russian President Vladimir Putin. Germany's Friedrich Merz said it warns the Russian leader: "This war will not be worth it."

It comes after Ukrainian President Volodymyr Zelenskyy warned that Ukraine will be forced to cut drone production if it did not receive a loan or financial support by the spring.

The Ukrainian president agreed with comments made by Polish Prime Minister Donald Tusk's comments that EU leaders needed to choose between "money today or blood tomorrow".

Hailing the deal, he wrote on X: "I am grateful to all leaders of the European Union for the European Council’s decision on €90 billion in financial support for Ukraine in 2026–2027. This is significant support that truly strengthens our resilience.

"It is important that Russian assets remain immobilized and that Ukraine has received a financial security guarantee for the coming years. Thank you for the result and for unity. Together, we are defending the future of our continent."

However, Mr Zelenskyy had been hoping that EU leaders would use €200bn of frozen Russian assets to fund the Ukrainian war effort.

He has previously said:"I would look at this question from the point of view of morality and justice.

"Of course Ukraine has the right for this money, because Russia is destroying us and to use these assets against their attacks is absolutely just.

"One can fear certain legal steps in court from the Russian Federation, but it's not as scary as when Russia's at your borders.

"So while Ukraine is defending Europe, you must help Ukraine."

The EU believes Ukraine needs an additional €135 billion to finance its defences over the next two years, with a cash crunch tipped to begin in April.